HOW A COURT ASSESSES WITNESS EVIDENCE: A SHORT PRIMER

We have already looked at the decision of the upper tribunal in Conegate Ltd v Revenue & Customs (CAPITAL GAINS TAX – purchase of shares) [2018] UKFTT 82 (TC) in relation to issues of privilege and without prejudice discussions. The same judgment also contains a succinct summary of how a tribunal (or court) will go about the task of making findings of fact when witness evidence has to be considered.

“Contemporaneity, consistency, probability and motive are key criteria and more important than demeanour which can be distorted through the prism of prejudice: how witnesses present themselves in a cramped witness box surrounded for the first time with multiple files can be distorted … Lengthy witness statements prepared by the parties’ lawyers long after the events also distort the accurate picture even though they are meant to assist the court.”

THE TRIBUNAL’S APPROACH TO THE EVIDENCE

After considering issues of privilege the tribunal went on to consider its own approach to the evidence.

“The evidence before us

37. We heard oral evidence from Mr Sullivan, a director and the beneficial owner of the Appellant. We also had the benefit of reading the documents in the bundles of documents provided.

Our approach to the evidence

38. The Respondents were careful to remind us of the approach which we should take to the evidence, and directed us to paragraphs 34 – 37 in Piper v Hales [2013] All ER (D) 257 (Jan), which starts with an extract from The Judge as Juror: The Judicial Determination of Factual Issues, an article by the late Lord Bingham of Cornhill, and also cites guidance from Lord Goff in Grace Shipping v Sharp & Co. [1987] 1 Lloyd’s law Rep 2017, and Lady Justice Arden in Wetton (as liquidator of Mumtaz Properties) v Ahmed and others[2011] EWCA Civ 610.

39. In accordance with that guidance our starting point should be to understand what is common ground between the parties and the “facts which are shown to be incontrovertible” (per Lord Bingham). Contemporaneous documentation is vital in this regard as, to quote Lord Bingham again, “In many cases, letters or minutes written well before there was any breath of dispute between the parties may throw a very clear light on their knowledge and intentions at a particular time”.

40. When assessing the witness evidence, we should weigh this with the objective facts. Lord Goff, in Grace Shipping, stated:

And it is not to be forgotten that, in the present case, the Judge was faced with the task of assessing the evidence of witnesses about telephone conversations which had taken place over five years before. In such a case memories may well be unreliable; and it is of crucial importance for the Judge to have regard to the contemporary documents and to the overall probabilities. In this connection their Lordships wish to endorse a passage from a judgment of one of their number in Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyd’s Rep 1, when he said at p. 57:

Speaking from my own experience, I have found it essential, in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.

That observation is, in their Lordships opinion, equally apposite in a case where the evidence of the witnesses is likely to be unreliable; and it is to be remembered that in commercial cases, such as the present, there is usually a substantial body of contemporary documentary evidence.

41. Although the passages set out above primarily deal with conflicting accounts, it is equally the case that the contemporary documentation and other incontrovertible facts can support or undermine a witness’ account of events, even when there are no other witnesses to offer a conflicting version.

42. Lord Goff had referred to witness evidence becoming unreliable due to the passage of time. Mr Saoul took us to paragraphs 15 – 22 in GestminSGPS S.A. v. Credit Suisse (UK) Limited and another[2013] EWHC 3560 (Comm), which helpfully set out in some detail the results of psychological research into the nature of memory and some of the issues arising. To quote just a few sentences from those paragraphs:

Underlying both these errors is a faulty model of memory as a mental record which is fixed at the time of experience of an event and then fades (more or less slowly) over time. In fact psychological research has demonstrated that memories are fluid and malleable, being constantly re-written whenever they are retrieved… (paragraph 17)

The process of civil litigation itself subjects the memories of witness to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events… (paragraph 19)

Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does or does not say … (paragraph 20).

Contemporaneity, consistency, probability and motive are key criteria and more important than demeanour which can be distorted through the prism of prejudice: how witnesses present themselves in a cramped witness box surrounded for the first time with multiple files can be distorted … Lengthy witness statements prepared by the parties’ lawyers long after the events also distort the accurate picture even though they are meant to assist the court.

44. So, our starting point is the contemporaneous documentation, supplemented by the evidence of Mr Sullivan. Although our impression of Mr Sullivan was that he was straightforward, forthright and candid in his evidence, we must be conscious of our own biases and bear in mind that consistency, probability and motive are more important than demeanour. We should reflect whether Mr Sullivan’s evidence is consistent with the contemporaneous documents, and must bear in mind that, in this case, there are other contemporaneous documents which have not been disclosed. Finally, we should be aware of Mr Sullivan’s ready acceptance that he was not a tax expert and that he had instructed his advisors to identify how he, and the entities at his disposal, should carry out his wishes. We should allow for the “considerable interference with memory” which Mr Sullivan is likely to have undergone in making his statement (which, as he accepted in oral evidence, was drafted by his legal team), and in preparing for the hearing before us. “